Preheat the oven to 350 degrees F (175 degrees C).

Cut each strip of bacon in half. Wrap a bacon strip around each water chestnut. Secure with a wooden toothpick and place in a shallow baking dish.

Bake in the preheated oven for 20 minutes.

While wraps are baking, mix together brown sugar, mayonnaise, and chili sauce in a small bowl until well combined.

Remove wraps from grease to a second shallow baking dish. Pour chili sauce mixture over wraps.

Return to the oven and continue baking until bacon is crispy, 10 to 15 minutes. Serve hot out of the dish with toothpicks.